The truth about a complex built for veterans and the middle class and how it has evolved through the years to become one of the more interesting and controversial of New York stories.

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Saturday, August 21, 2010

In the confusion over who will own Stuyvesant Town and Peter Cooper once the lawsuits are resolved, something emerged (and seems to have been missed by many) that was eye-opening for residents of the complex. In a NY Times report on August 9th concerning "billionaire hedge fund manager" William A. Ackman's "great ambitions for Stuyvesant Town," alert residents received the first real money figures for what may be in store for them should the complex turn co-op. If you thought you could buy your apartment for 100K to 200K--forget about it. You were dreaming or smoking your 60s' bong.

At $3 billion, Mr. Ackman would be paying about $300 a square foot for Stuyvesant Town. That is around a third of the value of recent sales in the area. That gives Mr. Ackman a lot of room to profit — that is, if he is successful in selling a large majority of the units.

This is where it gets complicated. The co-op conversion would assign shares in a corporation to each of the apartments based on the size of the unit and its location within the complex. The tenants would have the first right to buy those shares and effectively own their apartment. The tenants, regardless of how long they have been there, would be offered a discounted insider rate to buy the shares.

Mr. Ackman has agreed on a noneviction conversion, meaning that rent-stabilized tenants cannot be thrown out for failing to buy into the corporation, while free-market tenants would be able to continue living at the property through the end of their leases.

“Even if you sell units at a significant discount to market — with market being somewhere around $800 to $900 a square foot — that should be enough to pay down the mortgage and deal with the fact that we will have units that will be losing money,” Mr. Ackman said.

About 40 percent of the rentals are free market, so that means Mr. Ackman could renovate them when they become vacant and flip them quickly at market prices. At $800 a square foot and assuming 40 percent of the rentals equals 40 percent of the complex’s square footage, Mr. Ackman could make nearly $3.5 billion.

But that is assuming those rentals stay free market. A judge has ruled that the previous owners of Stuyvesant Town improperly converted many rent-stabilized units to market rent. That means many of those units appear likely to get their rent-stabilized lease back, throwing off the whole equation.

If a large number of apartments are returned back to rent stabilization, Mr. Ackman would need the majority of Stuyvesant Town residents to buy their units for more than $300 a square foot. But while some tenants might see this as a good investment, others might not have the cash for a down payment, especially given the downturn in the economy — or their rents may be cheap enough that buying does not make sense.

With the average size of an apartment at Stuyvesant town’s being 911 square feet, according to Mr. Ackman, that would mean that if it sells at about $600 a square foot, which is well below market price, it would cost about $546,600. The buyer would need to put up nearly $110,000 cash for a 20 percent down payment. The monthly payment, with a 30-year fixed-rate mortgage at 6 percent, plus assuming $1,500 a month for maintenance and taxes, would total about $4,100 a month.

A 5 percent mortgage would bring that total monthly payment down to about $3,850, but that is still higher than market rents of about $3,000 a month for similar amount of space. (The rent-stabilized tenants pay probably half that amount.)

Based on those numbers, it looks as if tenants will be paying considerably more than their current rent to own at Stuyvesant Town, even factoring in tax savings. Many will probably choose to continue paying below-market rates (as in many cases, it would be below the maintenance costs), which will eat away at any profits made from the sale of free-market units.

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One wonders who among us will be stupid enough to pay far more for living here than we do now. Perhaps sly deals on the side with investors who will offer a million for an apartment would make things workable for tenants (if they want to move out of Manhattan), but otherwise the above plan seems like an instant failure. Besides which, would you pay over half-a-million and get into personal heavy debt to own this run-down, feces and urine laden college town--where you will probably have to pay extra maintenance fees for neighbors who choose to opt out of the plan?

Now, somehow, I don't think the city big shots will let tenants off the hook. Ackman, if he gets the property, promises a non-eviction conversion. But that's now, before reality sets in.

Hall of Shame Award to CWCapital from Stuy Town And Peter Cooper Village Tenants

Awarded for the Roberts Settlement Massacre, in which many tenants received mid-lease rent increases from hundreds to over a thousand dollars, compelling tenants to examine the need to move out with their families at short notice. Doubly awarded for the Oval Park Massacre, in which healthy trees were cut down and plantings viciously uprooted to make way for an institutionalized look of order.

Thinking of Renting in PCVST?

Read Yelp reviews to find out what it's like living here. Please note: As of May 16, there is a suspicius intrusion of what appear to be positive reviews appearing on the PCVST Yelp page that are sourced from a "rewards program" set up by the landlord.

The Other Yelp Reviews

Yelp can be tricky and bounce reviews for a variety of reasons, like being a member and posting just one review. Very often, however, these reviews hold important truths about what's being reviewed. READ THESE TOO.

Banned Dog Breeds in Stuy Town

Cute rottweiler. But... looks like there is some difficulty in enforcing the ban on certain dog breeds allowed inside Stuy Town/Peter Cooper Village. Somehow pitbulls and pitbull mixes have been registered in STPCV and are allowed to be freely walked about the grounds! Another fail of enforcing the rules around here? You decide!

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Stuyvesant Town Newsreel

Read it and Weep

Current Value of ST/PCV

Was 5.4 Billion Dollars when Tishman Speyer bought the place.Became 1.7 Billion Dollars when Tishman Speyer left, with their tail between their legs.Current estimate? Over 2 Billion?

Ex-landlord

Rob Speyer

1947 Stuy Town Plaque Honoring Met Life Chairman F.H. Ecker (Removed in 2002 and never seen again)

"... who with the vision of experience and the energy of youth conceived and brought into being this project, and others like it, that families of moderate means might live in health, comfort and dignity in park-like communities and that a pattern might be set of private enterprise productively devoted to public service."

Co-op/Condo Conversions

Non-Eviction Conversion:
Requires commitment from purchasers for 15% of the apartments. Both rent regulated and market rate tenants are given the opportunity to purchase. Rent regulated tenants cannot be evicted because they choose not to buy. However, the owner is not required to offer a lease renewal to market-rate tenants.
Eviction Conversion:
Requires written commitment from 51% of the tenants in occupancy. All tenants are given the opportunity to purchase. Those who choose not to can be evicted. For rent stabilized tenants who choose not to purchase, they can be evicted within 3 years after the plan is declared effective. However, rent stabilized tenants who are disabled or senior citizens are exempt from eviction. Market rate tenants can be evicted at the end of their lease. Less likely conversion tactic. [The TA insists that any plan they support will be non-eviction.]

I am writing on behalf of everyone at Tishman Speyer to express how honored we are to become part of your outstanding community. We are a business with deep roots in New York, a true love of our city and a great respect for the neighborhoods that make it special. We are committed to maintaining the unique character and environment that have made Peter Cooper Village and Stuyvesant Town such a wonderful place to live for so long. We look forward to providing you an extraordinary level of service and attentiveness that will be the source of pride and satisfaction for the entire community.

Neighborhood Recommendations

New to Stuy Town/Peter Cooper Village? Here are some basic recommendations.

Best supermarket: Associated on 14th St. between 1st Ave. and Ave A. The cheapest prices, fantastic weekly sales, very affordable lunches; solid, responsive management. Some of the young female cashiers have attitude to spare, though. May be too far for Peter Cooper residents.

Best deli: A Stuy Town favorite is Lenz's on 20 St. between the 20 St. Loop. The way New York used to be. Be careful of unwanted "pepper" in your food, however. Lenz's has a B grade rating and was temporarily closed down due to an order from the Health Department. Bruno's on First Avenue is more upscale, with a greater selection of food items (higher-priced, too), but was closed down by the Health Department in June.

Best post office: Forget it! The post office on 14th St. is generally a nightmare, with long lines and, now, even shorter hours.

Disappointments:

The Stuy Town Starbucks on First Ave. is not very cozy, and the music in the morning is too loud and uptempo. Gently awaken the souls off to work....

More recommendations to come!

Macular Degeneration Support Group

If you are currently diagnosed with Macular Degeneration, the New York Eye & Ear Infirmary is offering a support group for you. Conveniently located next to the Peter Cooper Village Stuyvesant Town apartment complex, our group offers the opportunity to share stories with other members, listen to expert guest speakers, and learn coping strategies to reduce stress. Our group runs on the first Wednesday of every month and we would enjoy seeing you there.
Please contact Baptiste Nicolas, Social Work Assistant at 212-979-4105 for further information and to see if this group is right for you!